Control Accounts and Reconciliation Question 1

QUESTION 1 – Control Accounts and Reconciliation (1003)

Salman has extracted the balances from his sales ledger as 31 July 2004 and the total was Rs.
17,200, which has been inserted as trade debtors in the trial balance. The trial balance does not
agree, neither does the schedule of debtors with the balance on the sales ledger control account.

An examination of the records revealed the following errors;

1. The discount allowed column in the cash book has been overcast by Rs. 200.
2. An invoice for a sale to Omer has been completely omitted from the books. The invoice is for
Rs. 84.
3. Goods returned by Saad, which had been invoiced to him in the sum of Rs. 160, had been
correctly entered in the sales returns book, but debited to his account as Rs. 106.
4. Goods with a selling price of Rs. 1,000 had been sent on “Sales or Return” to Javed.
Although Javed has not yet indicated his intention to purchase the goods, the transaction
has been entered in the sales day book.
5. A bad debt of Rs. 50 has been written off in the sales ledger but this item was not entered in
the journal.

Required
(a) The sales ledger control account, showing clearly the original balance on the account at 31
July 2004 and the entries required adjusting the account for the above items.
(b) A calculation of Salman’s corrected trade debtors figure at 31 July 2004.

ANSWER 1 – Control Accounts and Reconciliation (1003)

Part (a)
Receivable Control A/c
Rupees Rupees
Bal. b/d (bal. figure) 16,784 Goods on sale or return (4) 1,000
Discount over-casted (1) 200 Bad debts (5) 50
Sales invoice omitted (2) 84 Balance c/d (see part b) 16,018
17,068 17,068

Part (b)
Reconciliation Rs.
Total of list of balance before adjustments 17,200
Add: further debit – Omer (2) 84
Sales return recorded on wrong side with wrong amount (106+160) (3) (266)
Sales wrongly recorded (4) (1,000)
16,018

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